Rule of 40

“In fact, if you look at all the publicly traded SaaS companies, over 80% of the total market value is inside of companies with E-forty or higher, less than 20% of the value is E-forty or lower.”

“If you bring that into consideration and we're trending healthily above the rule of 40, which is basically the growth percentage plus your EBITDA.”

“They rank lower on the rule of 40 matrix, which actually is a direct correlation between how well you're positioned on that rule of 40 matrix to what your valuation is, either at exit or on a capital raise. And so If your rule of 40 is very high, which ours is…”

“You've got to get to a hundred million with rule of 40 at a hundred million for you to really be on, you know, a potential IPO path.”

“Now, 21% of the variation in multiple is explained by variation in rule of 40, but you can do better.”

“So if you just use rule of 40 where you composite, you smoosh growth and efficiency together, until Q two of last year, there was actually no correlation. So, like, I would have called total BS on using rule of 40 by itself before Q two of last year. It just w…”

“If you were to take all the data that's in the 20, the zero, the under zero to up to 40, and then compare that to the over 40, it was about 1.5 x higher for the people who were over 40 before. And now it's two x higher if you're over 40.”

“CAC ratio to me is superior to the rule of 40. Why? I'm sorry. The SAS magic number. Why? Because you can measure how much sales and marketing investment you need to make for one dollar of new name ARR, and How much sales and marketing, customer success invest…”

“So 44% of enterprise value to next 12 month multiples can be explained by rule 40 versus revenue growth.”

“But it's now the number one SAS metric as correlated to enterprise value in the next 12 months revenue. A year ago, it was number five. Growth is still number two. But balanced growth with profitability is number one.”

“What's becoming more and more prevalent today is the importance of the rule of 40, profitability, sustainable growth, and less on growth at all costs.”

“We will not hit the rule of 40 this year.”